Study finds: Economic peace no replacement for a political solution

A new study published by the Peres Center for Peace argues that economic peace, though a helpful tool, cannot replace a political solution with the Palestinians.

The study was released last week at a special conference on the topic at Tel Aviv University, following a meeting between Vice Prime Minister Silvan Shalom and Palestinian National Economy Minister Bassim Khoury...

...Ashkenazi, who prior to joining the Peres center was the head of the IDF's West Bank and Gaza Strip Civil Administration Economic Branch, challenged the assumption that merely pumping money into the Palestinian economy would increase willingness for peace.

He recalled that back in 1999, the term "the cost of loss" was thrown around liberally.

"The reasoning was that by developing the Palestinian economy, increasing wages, starting businesses and improving their quality of life, the Palestinians would have something to lose and the cost of walking away from negotiations would be very high, so that on the day when the people want to rise up, the business leaders and the politicians would step up to calm things down," explained Ashkenazi.

What followed was a period of rapid economic expansion that saw a multitude of joint projects, increased tourism, skyrocketing GDP, five consecutive years of nine percent growth and improved bilateral relationships.

"And then came the surprise that caught both us and the Palestinians off-guard. Someone, most likely Arafat, lit a spark... the spark lit a flame, which in the midst of [an] unprecedented economic flourishing, set the Palestinian economy back 50 years, pushing the economy down by 40%. The 'cost of loss' proved an ineffective deterrent."...